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TSP Talk Weekly Wrap Up

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The momentum of the previous week continued into this week propelled by earnings and inertia. All three TSP stock funds were up for the week with the C and S-funds up more than 1%. The C-fund was up the first four days of the week before finally pulling back slightly Friday to end a seven day streak of gains. Earnings were mostly over reaching expectations for the third quarter and that kept new money coming while the previous highs had a target on them. The C and S-fund both reached new highs on Wednesday and made higher highs Thursday. Both funds even remained above the previous highs of September; a good sign for the indices that could just as likely sold off again after reaching the top of the charts.

The question now is if the indices can keep attracting new money or when will investor want to secure their recent quick profits. And how much of the gains are really new money verse rotation into the heavy weight stocks of the indices? Inflation expectations for the next decade rose this week which has many running to riskier assets and out of low yields investments to combat inflation. Even Jerome Powell finally said that inflation is less transitory than originally thought.

Bonds sold off this week dropping 0.37% for the week. Rising inflation negatively affects the purchasing power of bonds over time so naturally prices are being driven down and yields higher by the prolonged inflation expectations.

Next week earnings reports come in even thicker and we will get report from the tech giants such as Microsoft, Alphabet, Facebook, Apple, and Amazon.

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Here are the weekly, monthly, and annual TSP fund returns for the week ending October 22:

The SPY (S&P 500 / C-fund) extended its winning streak to seven days this week before finally ending it on Friday with a 0.11% loss on the day. The gains put the C-fund in new territory starting Wednesday and a higher high was produced Thursday. Coming into Friday the C-fund was lagging the S-fund but a deeper loss by the S-fund gave the C-fund the higher weekly gain. The C-fund ended Friday up 1.66% for the week to outperform the other TSP funds.

The Dow Completion Index (S-fund) opened lower on Monday but found support from the open gap left behind from the previous week. The first four days produced 1.94% in gains for the S-fund and put the fund at new all time highs on Wednesday. The index pulled back by 0.56% Friday but remained above the previous high established on September 2nd. The S-fund was up 1.37% for the week.

EFA (EAFE Index / I-fund) pulled back Monday closing an open gap from Friday while U.S. stocks began the week with gains. The index progressed from there and even gapped up Tuesday leaving a new gap behind. The closing price was in the crosshairs of two trend lines but was not far off its highs for the day/week at closing. The I-fund added 0.62% for the week.

BND (Bonds / F-fund) slipped this week after seemingly reversing the previous week. The greatest headwind to bonds right now is inflation. Expectations for inflation rising and maintaining a higher pace over the next decade has worked against the purchasing power of 10-year bonds at expiration. To compensate, yields are rising and bond prices are dropping. BND did find a bottom on Thursday which happened to match with an intraday low from a mid-June low. Possible coincidence but still a low produced this week that may be tested next week. The current price has spent another six days below the 200-day EMA and now the 20-day EMA is less than the 200-day EMA. The F-fund shed 0.37% this week.

Good luck and thanks for reading. We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at the Market Comments page. If you need more help deciding what to do with your account, perhaps one of our Premium Services can help.

Thomas A Crowley
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The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.

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SPY (C Fund) (delayed)

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DWCPF (S Fund) (delayed)

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EFA (I Fund) (delayed)

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BND (F Fund) (delayed)

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